Mining Stocks, News & Tips on the ASX
Australia’s metals and mining sector is clearly the country’s largest industry sector. There are over 760 Australian companies involved in mineral exploration, development and production across more than 110 countries.
This sector includes several of the world’s largest diversified resource companies, including global giants such as BHP Billiton and Rio Tinto. There’s also plenty of potential to invest in future industry leaders. In fact, since 2009, investors in the Australian market have supported more than 400 new junior resource floats.
This sector relies heavily on equity markets to receive capital for the intensive development of mineral projects or the funding of higher risk explorations to locate new resource deposits.
Whether you’re interested investing in Rio Tinto, BHP Billiton, or any one of the multitudes of Australian mining companies out there, browse Australian Stock Report’s analyses below to find out everything you need to know about investing in the mining sector, including news, tips, and advice.
All Ordinaries Shares News Paladin Energy (PDN)
Paladin Energy (PDN) is a uranium miner, with projects located in Africa and Australia. PDN's long-term goal is to establish itself as a uranium producer through identifying, acquiring and evaluating advanced uranium projects. The group's current focus is on its African projects: Langer Heinrich (Namibia) and Kayelekera (Malawi). PDN shares have slumped in the few months since the Japanese nuclear crisis and the company last week released a reassuring statement aimed at stopping the share price rot. PDN says its financing facilities are in good standing and clarified that it currently has no plans to raise fresh capita – debt or equity – outside of the financing of its stage 3 expansion of its Langer Heinrich project . The uranium miner says the feasibility study on its stage 4 expansion is proceeding as schedule and the company is expecting a positive outcome. PDN also said that key shareholder Newmont Mining (one of the world’s largest gold miners) has indicated it will hang onto its 6.71% stake in PDN in the near-term and that the company has mechanisms in place if Newmont decided to sell out. Click for Daily Shares Advice
Rare Earths Shares to Buy Alkane Resources (ALK)
Alkane Resources (ALK) is a multi-commodity explorer and miner focussed in the Central West of New South Wales. Its Dubbo Zirconia Project is a world class resource of zirconium, hafnium, niobium, tantalum, yttrium and rare earths. ALK also has a new gold development planned at Tomingley based upon an 800,000 ounce (oz) resource. Additionally, ALK made a major gold discovery at McPhillamys (3 million oz) with its joint venture partner Newmont. ALK aims to develop multiple operations within a tight geographic area over the next five years. Rare metals and rare earths are a unique proposition given their use in green technology. Demand for many of the metals is being driven by environmental legislation to ensure emissions minimisation and energy consumption efficiency. Demand looking strong Rare Earths have long been considered a strategic resource for China, with LYC the nation’s only major competitor. China controls more than 90% of the accessible resources of rare earth metals. Over the last few years, there has been a trend in Chinese Government policy decisions supportive of government control of the Rare Earths industry in China. ALK shares have soared over the past year following news the Chinese Ministry of Commerce announced restrictions on Rare Earth exports. The total export quota for 2010 (30,259 tonnes) is 40% less than the total export quota for 2009 (50,145 tonnes). In addition, the export quota for 2H10 (7,976 tonnes) is 72% less than the export quota for 2H09 (28,417 tonnes). With China deciding to keep most of the world’s supply to itself, it leaves Alkane Resources and its peers in a good position to cater for buyers elsewhere. China is expected to continue reducing export quotas for rare earths in the coming years. A reduction in the order of 5%-10% is anticipated next year. The trend will likely continue until the Chinese government achieves its strategy of restructuring its rare earths industry, addressing environmental issues and preserving its resources for the long term. Free Shares to Buy Advice Quarterly update In February, ALK completed a $21 million capital raising. The funds will be used to complete its current projects and for further resource evaluations. According to ALK, the potential revenues from DZP products continue to increase assisted by escalating zircon prices, the Chinese Government classification of zirconium as a strategic metals and an indication of future preferences for value added zirconium products, and further restriction of their rare earth exports. Base case revenues at the rate of 400,000 tonnes per annum ore processed are now estimated at US$180Mpa with project open pit life of at least 200 years. The expanded case of 1Mtpa could generate revenues of US$450Mpa. The base case development for its Tomingley gold project confirmed a production of 370,000 oz of gold over a seven and half year life. Operating cash flows for this project are estimated to be $155 million with a capital cost of $95 million. Looking ahead ALK has built a substantial resource base and is proceeding towards several developments. Following the capital raising, the company is well funded to pursue its projects. Alkane Resources is prospecting and mining key commodities at the moment which are experiencing increasing demand and prices. Peers such as Lynas Corp (rare earths) and Iluka (mineral sands) have experienced strong gains over the past few months as investors acknowledge the value of their minerals. Click for more Shares to Buy advice.
ASX Top 200 Stocks News Fortescue Metals Group (FMG)
Fortescue Metals Group (FMG) is an iron ore miner, with operations located in the lucrative Pilbara iron ore province in Western Australia. The company is the third biggest iron ore miner in Australia behind BHP Billiton (ASX:BHP) and Rio Tinto (ASX:RIO) – two of the market’s leading blue chip stocks. On 1 June, FMG CEO Andrew Forrest announced plans to step down from his role on July 18. Forrest, who founded FMG in 2003, will assume the new role of company chairman at the board’s next meeting on August 18. Chief Operating Officer Nev Power will become the new FMG CEO upon Forrest’s exit. Separately FMG said it is targeting an annual iron-ore production rate of 155 million tonnes by mid-2013. FMG was previously aiming to achieve the milestone by 2014. The group said key contracts are in place and the strong price of iron-ore has provided it with the means to grow capital spending. Click for FREE Daily Stock Advice
Best Performing Shares News Sundance Resources (SDL)
Sundance Resources (SDL) is an Australian-based international iron ore company developing the Mbalam Project in the Republic of Cameroon in the central west coast of Africa. SDL is advancing a significant exploration program and feasibility studies on the project based on production of 35 million tonnes per year hematite. It was also one of the hot stocks in the final months of 2010, surging from around 15 cents in September to a high around 60 cents by December. Recently, the group had to deny newspaper reports that its majority shareholder Hanlong Mining is looking to make a full takeover offer. SDL said on 16 May that it may sell up to 50% of its interest in the Mbalam Iron Project to a strategic partner. The group is confident of successfully introducing a strategic partner to the project by the end of June 2011. SDL shares rocketed 11% on the day of the takeover speculation, making it one of the best performers in the Australian share market. Click for Daily Shares Recommendations.
Buy Shares Ramelius Resources (RMS)
Ramelius Resources (RMS) is a Western Australian-focused unhedged gold producer with mining operations at Wattle Dam near Kambalda and milling facilities at Burbanks near Coolgardie. Wattle Dam is the group’s cash cow, producing solid amounts of high grade gold at a low cost. With Wattle’s mine life potentially coming to an end, RMS also has its lucrative Mt Magnet project, which will come into production this year. RMS is benefitting from its strong operations and boom times for gold, making it one of the hot stocks over the past year. The group is a low-cost operator with no debt and in a strong financial position with $90 million in cash on hand. Golden Wattle The company's primary project is the Wattle Dam gold mine, which has produced in excess of 150,000 ounces of gold since 2006. It is the highest grade gold mine in Australia and has a low cost of production of less than $500 per ounce of gold. It is currently being mined as an underground operation. However, the mine’s life span is coming to an end, so RMS is drilling to extend the mine life. In a recent update, Ramelius Resources noted it has extended its mine life to 2013. Fortunately, recent drilling confirms mine life upside, with a new high grade zone discovered at depth (as at February 2011). Wattle boasted production of 91,700 oz in 2010 at a total cash cost of $458 per ounce. It clocked record production of 26,668 oz in the recent December quarter and mine cash flow of $25.6 million. Wattle anticipates production of 90,000 oz in 2010/11. Buy Shares Advice Magnetic money-maker Last July, RMS purchased the Mt Magnet gold project, located 600km north east of Perth. The group intends to bring this project into production in 2011, which will handily replace Wattle Dam if the mine’s life is not extended. Mt Magnet looks to be a lucrative cash cow for RMS. A recent drilling program has identified a number of high grade gold targets for follow-up in 2011. The project boasts historic production of 5.6M oz of gold, JORC resources of 3.3M oz and reserves of 474,000 oz. Mt Magnet boasts potential production of 100,000 oz per annum (p.a.) for 5-7 years and a further 200K oz of gold is available in other pits. RMS has more than enough cash in the bank to push ahead with Mt Magnet owing to its Wattle Dam production sales. RMS is targeting an all-up cost of $800 per ounce. There is also potential to lift production to 150K oz p.a. by adding underground ore. The mine currently has an operating margin of around $1000 per ounce. Strong financials and sector For the half ending December 2010, RMS recorded a net profit of $32 million and announced capital return and a dividend totalling 7 cents per share. RMS is in a strong financial position with $86 million in cash and gold on hand with no debt. The group has a market capitalisation of $294 million and clocked a net profit of $20 million for FY10. For the year, total cash costs of $458 per ounce were produced and the group saw production of 91,700oz of gold in 2010. Gold has generally hovered around US$1,360 an ounce lately, with the precious metal seeing a bull market over the last decade, and repeatedly hitting historical new highs. Gold prices rose at an average of 18% a year over the last decade and companies such as RMS are benefitting from the boom. Indeed, the likely continuation of the boom means RMS is currently one of the stocks to watch. Outlook The Wattle Dam mine is the highest grade gold mine in Australia, is low-cost and has produced a lot of gold and cash for RMS, which is a debt-free company. If Wattle Dam’s mine life is not extended, RMS has its Mt Magnet prospect on hand for production this year. RMS is targeting gold production of 230,000 oz by 2013/14. Click for Daily Buy Shares Advice.
Industrials Stocks News Leighton Holdings (LEI)
Leighton Holdings (LEI) is one of the world’s major contracting, services and project development organisations, and also the world’s largest contract miner. LEI owns six diverse and independent companies: Thiess, Leighton Contractors, John Holland, Leighton Asia, Leighton International and Leighton Properties and has significant interests in Al Habtoor Leighton Group, Devine and Sedgman. LEI announced massive write-downs of its assets just over a month ago, and it has been one of the shares to sell since October last year. On 16 May, LEI said it expects to resume dividend payments in FY12 despite reporting an unaudited $382 million loss for the nine months ending March 31. The group forecast an FY11 net loss of $427 million, although it anticipates a $600 million - $650 million profit for the FY12. Leighton Holdings based its optimistic guidance on a positive macroeconomic outlook, underpinned by increased infrastructure spending in Australia. Click for FREE Stocks Advice.
ASX Mining Shares News Macarthur Coal (MCC)
Macarthur Coal (MCC) is a coal miner, supplying low volatile pulverized coal injection coal (PCI coal) to the steel mills of Asia, Europe and Brazil as well as some thermal and coking coal. Its primary focus is production at the Coppabella and Moorvale coal mines located near Moranbah in Queensland’s Bowen Basin, which together provide approximately 47% of the PCI coal exported from Australia. Along with many of its mining peers, MCC has been one of 2011’s shares to sell due to the impact of the Queensland floods on its production. On 4 May, MCC forecast FY11 net profit to be around 50% higher than the previous year’s $125.1 million result. Although the group expects full year NPAT to be between $185 million and $205 million, production guidance was lowered to 4.1Mt – 4.3Mt, from the previous 3.8Mt – 4.0Mt. MCC blamed the production downgrade on extreme wet weather in FY11. Click for more Mining Shares Tips.
ASX Gold Shares News Newcrest Mining (NCM)
Newcrest Mining (ASX:NCM) is Australia’s largest gold producer, with mining and exploration projects in Australia, Papua New Guinea (PNG), Indonesia and the US. The miner also has a smaller exposure to copper, mostly as a by-product of its gold production. The company is also considered among the market’s blue chip stocks by virtue of its size and performance. Furthermore, due to its leverage to rising gold prices, NCM has been one of the hot stocks over the past month. NCM reported its latest quarterly production numbers yesterday. The results showed a 16% decline in gold output from the previous quarter. Gold output was hit by wet weather events in eastern Australia, low rainfall which hurt production at Lihir, and civil unrest in the Ivory Coast leading to the suspension of operations at Bonriko. As a result, NCM said cash costs for the quarter rose from $440 to $497 per ounce. Newcrest Mining also downgraded full year gold production guidance to 2.82 million ounces (plus or minus 35,000 ounces). This compares to previous guidance of between 2.85 million and 2.95 million ounces. Copper production guidance was left unchanged at 75,000 – 80,000 tonnes, with cash cost guidance also remaining the same. Click for more FREE Shares Tips.
Shares to Buy Medusa Mining (MML)
Medusa Mining (MML) is an Australian-based gold and copper miner, focused solely on operating in the Philippines. MML’s assets include the high grade, underground, narrow vein Co-O Gold Mine and the Lingig copper prospect. The miner has a 5-year, 2-phase growth path to production of 400,000 ounces per year underpinned by strong cash flow from the Co-O Mine. With total current resources of over 2 million ounces (oz) of gold, Medusa Mining is in prime position to become a prominent gold producer. The group is impressively debt-free and un-hedged, with long-term cash costs slated for around US$200 per ounce but currently sitting comfortably below this level. The company is also looking robust at present on an encouraging environment for gold, which has continued to linger around all-time highs. Key upside drivers MML’s board recently approved construction of a new Co-O plant with capacity to produce 200,000 oz per year. Surface drilling results from the Co-O have already yielded an exceptionally wide and high grade zone. Elsewhere in MML's large tenement holding, work is progressing on a number of prospects, including the Bananghilig deposit. A pipeline of deposits is now being established within the Bananghilig Deposit (650,000 ounces at 1.3 g/t gold), and planning is now underway to commence a pre-feasibility study drilling campaign in July this year. MML’s projects have excellent exploration upside, with high grade vein and disseminated bulk gold targets, plus six porphyry copper targets. Its current exploration budget for FY11 is US$21 million. Revised production for FY11 of 102,000 oz at cash costs of US$190 per oz would see MML become an extremely profitable miner. Gold price rally We expect gold and silver prices to remain strong, as many investors seek to hedge the market with precious metals such as silver and gold. Gold is currently at record highs with the trend likely to continue in the short to medium term. In fact, MML has been one of the hot stocks since August last year on surging bullion prices. Key upside drivers for the gold price include inflation fears and US dollar weakness. Gold is now well above US$1450 and looks poised for further gains. First half joy MML recently reported a record first half profit. EBITDA was up 101% to $63.3 million (from $31.5 million) on year. EPS nearly doubled to $0.31 based on a NPAT of US$58.1 million. Revenues increased 90% to a record US$78.3 million, due to increased gold production and a higher price received on sale of gold. Following the solid result, MML paid a maiden un-franked dividend of 5 cents on 8 November. The unhedged gold miner achieved an average gold price of US$1,291 per oz. Cash costs were marginally lower at US$186 per oz than the previous corresponding period’s costs of US$189 per oz. This is considerably lower than Australian based miners like NCM and OZL which have cash costs $400+ per oz. Looking ahead The Philippines presents a reasonably safe mining environment with plenty of government support. The region has an excellent mineralized structural framework with world class gold-copper deposits. There has been an abundance of discoveries in the area. MML has huge potential for long mine life at the Co-O Mine with a conceptual exploration target size of 3 to 7 million oz. The miner has a good history of production upgrades which presents significant upside, so it will be one of the stocks to watch in coming months. In a sign of balance sheet health, MML advised that it is debt free. With money in the bank and solid cash generation, the company can afford to ramp up production organically, or perhaps through an acquisition. For FREE Daily Shares to Buy Advice & Medusa Mining news, click here.
Mining Shares News Rio Tinto (RIO)
Rio Tinto (ASX:RIO) is one of the world’s largest miners, mining and processing a wide range of metals and minerals including all the key base metals, precious metals, diamonds, iron ore and energy products. The miner is also widely considered among the market’s blue chip stocks. On 13 April RIO reported its first quarter production numbers. RIO said wet weather conditions impacted iron ore output, which fell 3% on-year during the quarter. Coal production was also affected by the flooding and cyclones. Hard coking coal output declined 12% from the 1Q10. Mined copper was 14% lower than the prior corresponding period, due primarily to lower grades at Escondida and Grasberg. For FREE Daily Mining Shares News and RIO Shares Advice, click here.
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